Newly private Dell late last week did something it likely would have ignored as a public company—it denied a report that it plans to lay off up to 9,000 sales and marketing personnel worldwide. But given its over-reliance on PCs and its stated move to data center, enterprise services and software sales, could the rumors be true?
Newly private Dell late last week did something it likely would have ignored as a public company. It sternly denied a two-source report in U.K.’s The Register that it plans to lay off as much as 30 percent of its sales and marketing workforce in Europe, the Middle East and Africa (EMEA) and cut 20 percent of its U.S. sales staff. So far, there’s no word if employees in Dell’s Asia Pacific operation also are affected.
Guessing that roughly one-third of Dell’s 110,000 employees are involved in sales and marketing, The Register estimated the vendor could lop off as many as 9,000 sales and marketing people worldwide from its employee rolls. The reason? Slow, slow and slower PC sales, which still comprise a goodly portion of the company’s revenue and a significant number of its employees.
Dell not only said the story was untrue but also said The Register’s numbers weren’t right, either. Here’s its statement to The Register:
Dell continuously evaluates and implements opportunities to improve our operational effectiveness and allocate our resources. When necessary, we’ll continue to make tough decisions to help ensure our long-term success – some of these decisions may affect our workforce. We are committed to building upon our multi-channel approach to serving customers – channel, online and direct – and are investing in sales coverage and training.
That sounds as though maybe there’s more than a kernel of truth to the layoff story. Inasmuch as Dell restructured its sales operation right after the private equity buyout, could the rumors be true, save some details? Here’s some clues:
- In early December, The Wall Street Journal reported that Dell offered buyouts to some employees, who had until Dec. 20 to accept the vendor’s offer. It’s not difficult to imagine that if Dell didn’t get the numbers it wanted from the early buyout offer, it could go to the pink slips instead.
- Dell overhauled its sales organization last November, reconfiguring how channel sales fits into its overall sales operation and placing direct and indirect sales under one umbrella in effort to improve sales engagements in the field and set a stronger foundation for channel sales. The easy conclusion is that Dell’s placing more emphasis on the channel, which means direct sales staffers associated with PCs and servers could be seen as extraneous.
- Throughout his months-long, contentious battle to take the company private, Dell chief Michael Dell repeatedly emphasized his plan to focus on the data center and enterprise services and software. With Dell’s current organization heavily tilted toward PC and server-associated personnel, it makes sense for the transitioning company to cut staff as it regroups to move toward cloud-related sales.
- Michael Dell has said all along that he wanted the elbow room to fashion the company to better suit the needs of today’s customers. For Dell, step one of that process is making certain it’s in shape to compete.
Given these circumstances, do the layoff rumors make sense? Actually, considering Dell's strategic direction, it would seem to make less sense for the company not to significantly reduce its workforce.